Short Term Rentals vs. Hotels
If you’re taking a trip, these are your two main options for the most part. Each has its benefits and disadvantages.

• Short term rentals usually need to be booked weeks or months in advance, while hotels can be booked last minute (you may have to pay more though).

• A lot of hotels come with additional features like a swimming pool, room service, and concierge, among others. With rentals, you might get a couple amenities but you’re on your own.

• Hotel packages can be purchased with your flight tickets, which can save you some cash.

The Sunshine State
Typically, international travel will cost you a whole lot more compared to domestic travel. You might want to save your trip to Aruba, Bahamas, or Cancun for another year where your bank account is looking a little more flush. You still have another great option though – Florida. One great advantage is that you can drive there, provided you’re not too far away.

Florida’s Hot Spots
Besides figuring out your travel, you also need to know where to go. Here is a list of notable Florida beaches, courtesy of About.com:

• Panama City Beach – some consider it to be the “Spring Break Capital”, which is not too hard to believe with half a million spring breakers each year.

• Daytona Beach – famous for its sands, as well as the Daytona International Speedway. It’s about an hour away from Florida’s Disney World and Universal Orlando.

• Miami’s South Beach – it’s the hip place to be, yet not out of control (like some other spring break destinations).

• Orlando – this is a great spot if you’re bringing your family along. You’ve got Walt Disney World, Universal, and Sea World to check out, along with many other attractions.

Booking your flight
You’ll pay less for your flight if you book 6-8 weeks in advance or if you buy your ticket right before the flight takes off, provided there are spare seats left on the plane. Buying last second is probably not the best way to go. Also, you will usually save money by purchasing two way tickets. Don’t forget to check out any hotel discounts you might get with your flight.

Don’t do it alone
Spring break will be more fun and safe if you bring someone along with you. Plus you can split your rent and other living expenses with a partner. Remember, you can enjoy spring break without being summer broke.

Sources:
About.com: Florida Travel

A couple weeks ago we were privileged to have Carla Johnson, Author of Magnetic Real Estate Photography share her real estate photography expertise in the form of a guest post. To return the favor we’ve shared 5 Tips for Effective Online Rental Ads as a guest post on Carla’s blog. Be sure to check out her site for lots of great real estate photography tips to attract the tenant or buyer you’re looking for.

As the search for rental listings moves online and ads become more standardized, you want to make sure you stand out from the crowd – in a good way. In this article we’ll review 5 ways you can make the right impression when you post online rental ads.

1. Consider your target
The first thing to do when writing your rental ad is to determine the type of tenant you want to attract. Once you know your target audience, you can tailor your ad to that crowd. When you focus your ad on attracting the type of tenants you want, the ad itself will do some of the screening for you.

2. Use good photos
These days, photos are a must for an effective rental ad. Many users skip over ads without photos, especially good tenants looking for a place to call home. Often users will assume ads with no photos mean the landlord either doesn’t care or has something to hide – neither of which will help you rent your unit.

In the online world, the first thing prospective tenants see are the photos you post along with your ad, and no matter how fantastic your ad copy is, your photos do most of the talking. Use your photos to showcase how great it would be to live in your unit. Check out Carla’s tips for taking Magnetic Real Estate Photos that will attract the tenants you want.

3. Be specific
Are you looking for lots of phone calls and emails, or lots of interested renters? If you want to skip straight to the interested tenants and avoid taking a bunch of calls from tire kickers looking for more information, be specific with your ad and provide all of the details up front.

Unlike rental ads in the classified section of local newspapers which often charge by the letter, most online sites offer plenty of space for you to provide all of the details. Take advantage of this space to provide the information tenants are looking for up front. Along with great photos, the most important details to include are location and price. Be sure to fill out all of the fields when posting your ads, list all of the amenities, and be clear on the terms. If you require a 1 year lease or utilities are extra, just state this upfront.

4. Avoid cliches
There are several cliches to be avoided when posting online rental listings:

• Avoid All CAPS – Maybe writing ads with CAPSLOCK was a clever marketing tactic at one point, but this cliche is often screened out by the younger generation and can make you look either angry or desperate .
• Avoid empty phrases – In real estate ads there are many overused words such as “nice, great, and beautiful” which have become “empty” words. Look for alternatives which really describe what your unit has to offer.
• Avoid abbreviations – Most sites give you plenty of space for your ad copy, so there is no need to use abbreviations. In your online ads opt for terms like “dishwasher” over “d/w” and “finished basement” over “fin bsmt.”

5. Choose your words wisely
When posting rental ads online you have more room to work with, but you should still use that space wisely. Use terms tenants love such as “free” and “all inclusive” to draw renters in.

When writing your ad be sure to “sell the sizzle, not the steak.” In other words, don’t just sell the features of your unit, sell the benefits those features provide. A dishwasher is a nice feature, but the luxury of never having to scrub dishes by hand is an even better benefit. Use your ad to paint a picture that makes the viewer want to move in today.

Finally, wrap up your ad with a strong call to action. Be clear on what you want the tenant to do next, and give them a reason to take action immediately.

Make the right impression
Your rental ad is the first thing prospective tenants see, so you must use your ad to peak the interest of the type of tenant you are looking for. Renters will form their first impression of both the property and the landlord from what they see in your ad, so use the 5 tips above to ensure that the first impression you make is good one.

Let’s say you’re buying a nice condo or a house and need some money for the down payment. You feel pretty good when you leave the bank. You just signed a 25 year loan for $100,000 with 5% annual interest rate, which sounds like a very good number. However, by the time you’re done paying off that loan, your interest will add up to about 75% of the original $100,000. That’s$75,377.01 to be exact. This is how the bank makes its money.

How is that possible? The answer lies in compounding and an amortization schedule can show you the nitty and gritty details. These schedules can be a bit of a pain to build from scratch, so we’ve created a working sample schedule for you to use. You’ll need to change the numbers to reflect your own scenario. The link to the excel file is at the bottom of this post.

A quick how-to:

1. Enter the loan amount, annual interest rate, number of years, and number of payments per year:

Excel will calculate your monthly payment automatically.

2. Adjust the amortization table if required. The default table includes 300 payments (25 years of monthly payments so 25 * 12). You may have to add or subtract rows. If you have a 30 year loan with quarterly payments, you’ll need 30*4=120 rows.

3. Once the rows are adjusted properly, you can view the statistics about your loan. You’ll see how much you’ll pay in total interest, in total principal, and the grand total for your loan.

Another useful feature of an amortization schedule is that for every payment period, you can see the exact breakdown of interest versus principle. For example, in the 20th payment on our default spreadsheet, you’ll pay: $402.86 in interest and $181.73 in principal.

When you take a look at this loan, you’ll notice that the majority of your initial payments will be covering interest. Only after the 134th payment will you be paying more towards the principle of your loan rather than its interest.

And that’s about it. These amortization schedules will come in handy when you’re shopping around for loans. Use them to your advantage and see how much interest you’re really paying. The excel file is below:

The Rentables Sample Amortization Schedule (Microsoft Excel Spreadsheet)

If you’d like to build your own amortization schedule from scratch, take a look at this guide:

University of South Dakota: Step By Step Example of PMT Function

The bottom line is you are looking for a Realtor who understands your goals and your investment system, and someone who is an expert in their geographical area. A good Realtor will filter out the fluff to bring you properties that actually fit your system and get things done in a timely manner.

Real Estate Investment Team selection criteria
As this series goes on, you’ll see this list again and again. It’s not here to fill space, it’s here because it is important. Your Realtor will be the member of your team which you work with most on the acquisition side, so you will want to choose carefully. Look for a Realtor who:

1. Owns investment real estate themselves
2. Cares about your goals
3. Has the appropriate qualifications
4. Has specific experience working with investment properties in the area
5. Has reasonable fees
6. Provides positive chemistry

Why Add a Realtor to Your Team?
A Realtor is (or should be) an expert in their geographic area. These professionals know their areas inside and out, and can give you all the details you need on a town or city and the individual neighborhoods within that town or city. A Realtor will be able to tell you about local amenities including schools, shopping centers, parks, hospitals, and public transportation. They will also be able to point you towards neighborhoods with the greatest upside potential, and steer you away from those in decline.

When you are ready to drill down and start looking at some properties, Realtors have MLS access and often get listing details from their local board before they make it to the public side of the national MLS system. In competitive markets this advantage can have a huge impact. Realtors also have access to a greater level of detail on listings which you won’t get working on your own.

A Realtor can help you make offers and handle negotiations. In the beginning stages of your investment career having the support of an experienced professional in this area can help push the deal along and help you get the terms you are looking for. They’ll also be able to guide you throughout the purchasing process and help with the paperwork that ensues.

As experts in their area, Realtors usually have a team of trusted professionals they refer their clients to. If you are looking to round out your team, a good Realtor can usually provide you with some recommendations to round out your real estate investment team.

Realtor Compensation
As a buyer, your Realtor’s services are usually free. Often, especially amongst first time buyers, there is an urge to find properties on their own to save money and avoid paying commission which is misguided. Traditionally the seller pays the commission out of the sale proceeds, so working with a buyers agent costs you nothing as a buyer. Rarely in life do you get something for nothing, but on the purchasing end the seller foots the bill for your Realtor’s hard work. Enjoy it now since you’ll be “paying it forward” when you eventually sell down the road.

Finding a Realtor
When buying a home as your primary residence, it is pretty easy to find a Realtor to work with since most agents focus on this segment of the market. When looking for an investment savvy Realtor to add to your team it is often best to seek referrals from other investors. Sure you might have some competition when a good listing comes through, but at least you’ll be working with someone familiar with investment properties and this alone will make your life much, much easier.

Qualifications
As with most other professionals, there are some specific qualifications to look for when selecting a Realtor. These change depending on jurisdiction, but look for a someone who is licensed through your local real estate board and a member of local, regional and national organizations.

Investment specific experience
As with any member of your team, be sure to find someone with investment specific experience. There are a lot of agents out there, but most of them specialize in selling properties to call home rather than properties for investment purposes. Look for someone who commonly deals with investors and owns investment real estate themselves. These individuals will be best informed, best able to understand your goals, and best able to provide the type of service you are looking for as an investor.

Once you have a few Realtors in mind, consider whether they meet the 6 criteria above.  If they do, and they pass your gut check, then get to work with them and stay tuned for tips on selecting a Real Estate Lawyer in Part 4 of Building Your Real Estate Investment Team.

Watch out for people who try to sell your properties that don’t fit your system, and always do your own due diligence by checking the facts and figures.

Buying your first home can be an overwhelming experience, we’ve designed this quick reference guide of all the tax benefits/credits you can receive from your first purchase:

HBTC (Home buyers’ tax credit)
This is a tax credit of $750 you (or your spouse) can receive when you purchase a qualifying home.

• Tax credits reduce your personal taxes payable (or increase your refund) for the year. They are applied against the tax that you’ve paid on your personal income and it’s transferable, meaning your spouse can claim this credit on his/her return.
• A qualifying home is a housing unit acquired after January 27, 2009.
• Where to claim? Line 369 of your personal tax return.

See the following link for more details: http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.htm

Land transfer tax refund for first-time home buyers
Land Transfer Tax applies to all transfers of land in Ontario.

• If you purchased your first property after Dec 13, 2007, the refund applies to all properties: newly constructed and pre-owned.
• Maximum refund is $2,000 and it’s claimed at the time of the registration. No interest is paid on refund.
• You must be over 18 years of age and occupy the home as your principal residence within 9 months of the transfer.
• You cannot have owned a home, or interest in a home anywhere in the world.

See the following link for more details: http://www.rev.gov.on.ca/en/refund/newhome/

HST Rebates
Newly introduced Harmonized Sales Tax will come in effect starting July 1, 2010 and will apply to purchases of new properties only.

• Buyers of new homes will receive a rebate of up to $24,000 regardless of the price of the new home. This rebate will ensure that buyers of homes priced up to $400,000 will, on average, pay no more (or possibly less) tax than under the current PST system.
• This rebate also applies to residential investment property purchases

See the following link for more details: http://www.servicecanada.gc.ca/eng/goc/gst_new_housing.shtml

RRSP Home Buyers Plan
HBP is a program that allows you to withdraw up to $25,000 from your RRSP to buy or build a qualifying home. Here are the details:

• Obviously you can only take out what you contributed into your RRSP ($25,000 max)
• Property must be your principal place of residence
• No repayment is necessary in the year of purchase
• You have up to 15 years to repay the amount you withdrew from your RRSP
• CRA will send you a statement that will include your HBP balance and required repayment for the following year
• You make a repayment by contributing to your RRSP and designating the required portion of the contribution as an HBP repayment (let your accountant do that for you)
• If you don’t make a repayment, the required HBP payment will be added to your annual income for the year

Why is this a good idea?
Your RRSP account is sitting idle until you retire and transfer the balance to RRIF, therefore you might want to borrow money from it tax free to help you with your down payment or renovations.

See the following link for more details: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

By taking advantage of these credits, rebates, plans and programs you can offset some of the tax man’s hit on your wealth creating efforts.

1. Countertop Dishwasher
Doing dishes can be a chore, especially if living with roommates. If your apartment does not come with a full size dishwasher, you’re stuck washing dishes by hand or eating out. Another option is to give a countertop dishwasher a try. Countertop dishwashers can be easily placed inside a cabinet if you have one with enough room. The only requirement is that it’s not too far away from the sink since you’ll need to attach a hose to the faucet. Most of these dishwashers have a heating mechanism inside so heating  water to a high enough temperature shouldn’t be an issue. You can pick one up for about $200.

2. Washer-dryer combo
It’s a bird… no it’s a plane… no… it’s a washer-dryer all in one. Washer dryer combo machines are becoming more popular in North America. Previously, they were only available in South Korea, home of LG is located (a main manufacturer of these units).  Washer-dryer combo units do not require humid air venting (the long hose that typically vents humid air outside), making them very convenient and versatile. You can place these units pretty much anywhere, as long as there is access to a water source, a drain, and an electrical plug. These combo units cost between $1000 and $2000, depending on the model.

3. Convectional Toaster Oven
Most apartments come equipped with a regular ovens. These use up a lot of electricity and can be a pain to clean. Countertop toaster ovens are versatile, heat up quickly, and don’t take much space. If you do decide to get one of these portable ovens, go with one that has a convectional cooking feature. Convectional units have a fan inside that circulates the hot air and cooks your food faster as a result. You can find these toaster ovens for about $100.

4. George Foreman Grill
Lean, mean, fat grilling machine. Yes, food prepared on an electric grill doesn’t taste as good as the same thing prepared on a regular charcoal or propane grill, but it’s convenient. These grills are easy to use, easy to clean, and inexpensive.  Some of them turn into a griddle, allowing you to make pancakes, scrambled eggs, and etc.  Depending on the model and size, cost for these grills ranges from $20-200.

5. Mini Fridge
These can come in handy even if you already have a full sized fridge. Mini fridges are perfect for dorm rooms as well. There are two main types: one piece fridges and ones with a separate freezer compartment. The second kind is more convenient because the freezer has its own door. Mini fridges go for about $200 a piece. If you live near a college, you may want to check out their classifieds at the end of the semester. Many students will try to sell theirs when they graduate.

As you can see, some of these appliances are not cheap. Keep in mind though: if you buy new, you usually get a warranty and if you keep them in good shape you can resell them and get a good portion of your money back when you move out.

If you have any other examples of good compact appliances, feel free to share them in the comments section.

Sources:
Apartment Therapy

Real-estate is mostly purchased for long-term, mortgages typically last 25 years and therefore it’s safe to assume that this is a long-term loan.

A study completed by Moshe Arye Milevsky of interest rates from 1950 to 2000 concluded that home owners are better off, on average, opting for a short-term variable interest rate compared to a long-term fixed rate. On average, a consumer with a $100,000 mortgage and amortization period of 15 years would pay $22,000 more with a 5-year fixed rate than an individual with a 1-year fixed rate.

CanEquity also concluded that variable rate mortgages have been a better option for consumers over the past 10 years. (http://www.canequity.com/mortgage_rate_history.stm)

Based on these studies, it’s clear that the variable rate mortgages are advantageous, however, they may not necessarily be right for you.

Let me give you an example:
You are generally a risk-adverse individual; you own several rental properties that are self-sustaining via rents collected; you do not have any additional cash that you want to be putting into those properties.

If you own a rental property in Kitchener-Waterloo-Cambridge for example with a variable rate of 1.95% and a $200,000 mortgage on a 25-year amortization period, your current monthly mortgage payment would be $842.85.

If you were to obtain a fixed 5-year mortgage today, your interest rate would go up to about 4%, and would result in a monthly mortgage payment of $1,055.67 – this payment would be locked for 5 years guaranteed not to be any higher or any lower.

If your current rents can still generate positive cash flow with a 5-year fixed rate, then you might want to pay additional $200/month to sleep comfortably at night knowing that you will not have to put any personal financing into the property for the next 5 years, especially knowing that the interest rates are expected to increase.

Personally, I’m more of a risk-taker and I don’t expect the interest rates to be higher than 4% on average over the next 5 years, therefore I would opt for a variable rate mortgage. If I were more risk adverse I could bank the difference today and dip into that pool if my variable rate rose above the 5 year fixed rate. In addition, seeing statistical studies performed by reputable sources reinforces my stance on this issue. When it comes to variable versus fixed, there is a premium for the certainty of a fixed rate, and in the long run variable has been proven to win.

Today we’ve got a treat for you. Carla Johnson, author of Magnetic Real Estate Photography has put together the following guest post for our readers. Carla is a real estate photography expert and an active investor who owns properties for rent in Kitchener and the surrounding area. Today she shares some helpful tips on taking the type of photos that will act as a magnet to attract the right tenants.

If you have ever looked online for a property, you’ve seen what I’ve seen – the dark rooms, the funny corners, the glaring windows, the messy tables, the weird angles and the mirrors with camera flashes in them – and all you want to do is look away! (For some of these samples, see Carla’s Blog)

Too many real estate professionals are unaware that the “Sell” now takes place online. This is a huge shift. Ever since selling or renting real estate began, the goal was to get people to visit the property. That was where the “Sell” used to take place. Not so anymore.

Consider eBay. People spend hundreds of thousands of dollars on products they can’t even touch. Sellers on eBay post lots of information, and numerous photos of their products displaying all sides of the items and zoomed in detail shots. Thorough information makes buyers feel comfortable enough to pay up front then wait for the item to arrive in the mail.

The “Sell” takes place ONLINE! Any landlord who gets this is right on the edge – but too many are not. If the property is properly featured with lots of effective photos and a truly helpful listing, a big part of the job is done.

Start with a catchy headline that lets the prospective tenant know there is something special in your place for them. Then write a helpful description of the place in a talking voice, but keep it short and to the point. I am finding that a lot of people only look at the headline, and the pictures.

Put some thought into your photos. When you look at a good photo, your eyes linger and stick to it – like a magnet. When you look at a bad photo, you have to look away. Great photos draw viewers and business. It’s magnetic!

Carla’s tips for taking “magnetic” photos
When you head out to take shots of your property you want to show the following:

• the path to the front door
• the whole layout of each room
• more floor than ceiling
• all rooms level and in focus
• good colour
• everything tidy
• how one room leads into another
• toilet seats down
• shower curtains open

A listing or ad with only a few images will tell the viewer – intentionally or not – that something is hiding. People expect to see everything online these days before they even view the place. If the photos in the ad make a renter comfortable, they will arrive at the visit comfortable and feeling at home – ready to move in. That is the kind of attitude you want from tenants when showing a unit isn’t it?

Thank you to the team at The Rentables for the invitation to guest post today. I wish each of you and your readers the best in all your endeavours. If you or your readers have any questions, please feel free to contact me: carla@magneticphotography.com.

May you always give your best to attract the best of everything in your life. It’s magnetic!

Carla Johnson
Author of “Magnetic Real Estate Photography”
www.MagneticPhotography.com

To find financing for your next deal, you can either go to the bank and speak directly with a mortgage representative, or you can work with a mortgage broker. In my experience, using a mortgage broker has been the better choice since they work with multiple lenders and can usually find a lender that will offer better terms. Mortgage brokers are in-the-know and are aware of which banks are anxious to lend at any given time. As an investor, you may get to a point where one particular bank is not willing to lend you any more money and working with a broker is nice when you’ve outgrown your bank.

Real Estate Investment Team selection criteria
Like selecting any other member of your team, you’ll want to find a mortgage specialist or broker who:

1. Owns investment real estate themselves
2. Cares about your goals
3. Has the appropriate qualifications
4. Has specific experience working with real estate investment financing
5. Has reasonable fees
6. Provides positive chemistry

What mortgage brokers offer
Mortgage brokers are well connected within their industry, and have access to capital from banks, credit unions, trust companies and other financial institutions. This wide range of funding sources gives them the ability to shop around and find the best rates for your particular deal. Whether you are buying your principal residence, first investment property, or a small apartment building, a broker can find you the best rates and terms.

How mortgage professionals make money
Some brokers charge an upfront fee to put your deal together, but most only get paid once the loan is funded. Usually the broker will earn a fee (from the lender) of 1-2% of the loan value once the loan is complete. Depending on the type and complexity of the deal, they may earn up to 5%. Brokers usually only get paid when loans close, so the smart ones will provide the consulting and advice you need to make sure you don’t get stuck after your first deal. The more properties they help you buy, the more they will earn.

Get some referrals
When selecting a mortgage broker, there are some general things to look for, as well as some specifics. Getting positive referrals from friends, other investors, or other members of your real estate investment team is often a good start.

Qualifications?
When it comes to appropriate qualifications here is what you’ll want to look for:

• In Canada – Member of Canadian Association of Accredited Mortgage Professionals (CAAMP) formerly known as CIMBL with an Accredited Mortgage Professional (AMP) designation
• In the US – Member of the National Association of Mortgage Brokers (NAMB) who must adhere to a code of ethics and higher standards of practice

Investment specific experience
When selecting a new mortgage professional as part of your team, it is critical that you select someone with investment specific experience. In fact, the more investment deals they have done, the better. Obtaining financing for someone’s principal residence is much easier than putting together the funding for an investment property, and you’ll want to work with someone who is familiar with that process – especially if you’re not.

Once you have shortlisted a few candidates for your team’s “financier”, consider whether they meet the 6 criteria above.  If they do, and you feel good about working with them, then stay tuned and we’ll let you know how to select your Realtor in Part 3 of Building Your Real Estate Investment Team.

As a final note, remember you are looking for a broker who can help you finance more than just your primary residence. Look for a broker who is interested to hear about your goals and is able to help position you well for future purchases.

The question then becomes: what causes the bond prices to rise and yield to decrease?
The answer to that question is quite complex, but in simple words, when government backed bonds are perceived as the safest investment, prices of bonds increase (thereby reducing their yield since they pay a set amount of interest no matter what the price).  This can be seen in the recent economic melt-down; where subprime mortgage-backed securities turned out to be overpriced, investors turned to bonds to keep their money safe which drove yields downward.

When will they go up?
In the chart it’s evident that the bond-yield has reached the bottom and it’s slowly starting to recover (gray line). This means that mortgage rates will soon follow and slowly start to increase by June 2010. As the economy recovers, so will the bond yield and therefore you and I will need to pay more interest on money borrowed in the form of a mortgage. After reading numerous reports, my prediction is that we will see only a slight increase in interest rates during 2010 since the economy will not recover overnight. Will this be a good enough reason to abandon the all-time low variable rates in favor of a 5-year fixed mortgage? I will explore that in Part 2 of this series.